The time-honored warning that “you can’t go home again” no longer applies to moving outsourced offshore customer contact centers back on shore. Now companies can go home again – and do it cost-effectively.

Companies that base their labor-sourcing decisions on cost are looking more closely at the impact on margins and profit, and some are rethinking their offshored call center decisions. Joe Jacoboni, CEO, president and founder of Contact Centers of America (CCA), says companies realize that customers are not getting the service they demand. Issue resolution is essential, but he refers to a CFI Group report that reveals that offshore call centers have twice as many unresolved issues as domestic call centers.

According to CFI Group’s most recent annual study of customer satisfaction with contact center services (“2009 Contact Center Satisfaction Index”), 2,200 survey respondents in March who had called a contact center in the preceding 30 days and believed they had reached an offshore call center were three times as likely to defect as a customer. But if they perceived they had reached a domestic call center, they were twice as likely to recommend the organization to someone else.

The report also monetizes a customer recommendation. Assuming a customer tells 10 people about the call center and 15 percent of them act on the recommendation, revenue for a $50 offering could amount to $84,528. The reverse picture is grim, multiplying the defecting customers and thousands of lost recommendations.

CCA’s Jacoboni conducted a survey to determine the true costs of a call. The survey found that handling a customer call in an offshore center took 25-35 percent longer than in a U.S. call center. Moreover, first-call resolution was 20-30 percent less offshore (resulting in more call backs), and abandonment rates were 5-10 percent higher offshore. The true costs of a call often change the rosy picture of lower labor costs.

Driving the movement

In addition to numerous reports of poor customer service in offshore call centers, the enormous U.S. unemployment numbers are driving Americans to demand that politicians and corporate leaders take care of Americans first rather than outsourcing offshore or nearshore.

It’s difficult to pin down how many U.S. companies are moving their call centers back to the United States since many don’t want people to know their customer care is outsourced in the first place. However, two examples are clear indicators of such activity. Michael DeSalles, a strategic analyst at consultancy Frost & Sullivan, points out that United Airlines is moving 165 call-center jobs from India to Chicago and Honolulu to help improve customer service. AT&T Inc. moved 5,000 high-tech jobs back to the company’s U.S. payrolls. Most of these Communications Workers of America jobs are now located in centers in North Carolina, Louisiana, Alabama, Florida, and Kentucky.

“As they look at long-term strategic planning, a good number of companies have expressed that they plan to move back on shore,” says DeSalles. “The most important factor driving this movement is the emphasis on agent quality and client demand for higher quality interactions. Organizations want to differentiate their service/sales delivery while maintaining high levels of customer satisfaction for future retention and loyalty. This is especially true for marquee brands.”

Many offshore call center agents don’t understand American culture, especially why Americans need an answer right now. “If they can’t really ascertain a customer’s needs, how can the customer service reps input proper data into the system?” asks Jacoboni. That data residing in companies’ systems is valuable for customer retention.

Two years ago, companies weren’t concentrating on customer churn because there was a steady supply of new customers, Jacoboni says. But in today’s financial environment, customers don’t have as much money, so they want value for the money they spend. Thus, loyalty and retention are now crucial.

“Organizations need to deliver extreme customer satisfaction (XCSTM), meaning the customers feel they got more than they paid for. Then they’ll tell others about it,” states Jacoboni. And that’s more likely to happen in a domestic call center.

Eliminating the barriers for moving back on shore

In the past, barriers to moving a call center back on shore included the high cost of staffing, training, technology, and the switching costs of terminating a contract early. Organizations can now handle their move back onshore cost-effectively, thanks to hosted contact center technology and the distributed agent workforce model.

“At CCA, we can implement our platform and get an organization up in 48 hours (excluding training), and we have access to a workforce of thousands available immediately,” states Jacoboni. “With our hosted technology and our remote workforce – employees working from home – we can deliver robust services as cost-effectively as an offshore center.”

CCA’s platform uses Vertical Solutions, Inc.’s Software-as-a-Service (SaaS) technology, which gives client organizations a competitive advantage. The technology gives organizations the ability to quickly develop custom applications (without the involvement of programmers) that capture specific CRM data that the organization seeks. Did the customer like the product? Did the customer think there were areas of the product or service that the company could improve?

Among other benefits to moving to the new model of call centers is CCA’s practice of providing jobs especially for disabled American veterans. Twenty-five percent of its employees are vets or retirees. Another 50 percent of the company’s highly skilled workforce is university undergrads; they work in call centers in markets that mirror their field of study.

The new model of call center that CCA provides includes another significant competitive advantage. “We take a partnering approach to our service delivery, helping our clients become more profitable, focus on their brand, and invest in their future,” says Jacoboni. The company assesses all touch points in a client’s CRM functions (sales, marketing, distribution, and contact center) and recommends best practices. CCA’s consultative solutions-oriented approach involves collaboration with Vidal Consulting Group (loyalty and strategy experts) and Kenzler and Associates (contact center process experts) to deliver “extreme customer satisfaction.”

Though offshore call centers have dominated the market for the past few years, analyst DeSalles recommends organizations assess whether a call center has the language skills and education levels that support customers’ service expectations into the future. Also, will the offshore workforce be able to successfully meet the organization’s need for cross-selling and up-selling as the product or service matures? Another important consideration: has the organization considered a U.S. work-at-home agent model from a trusted outsourcing partner?

Call centers’ future

“Call center outsourcers offering hosted contact center technology to support the distributed-agent model is a very logical and natural extension of the business,” says DeSalles. The traditional “big box” outsourcers such as Convergys, Sitel, and Teleperformance have added work-at-home agent capabilities to their solutions. West Corp. has had a successful home-agent model in the market for many years. CCA is especially attractive to the mid-market.

In addition to eliminating infrastructure and real estate costs, he points out the model contributes to a green IT environment. DeSalles also explains that greater use of the Web and automated (agentless) outbound notifications will reduce the number of inbound calls and maximize customer satisfaction for simple transactions.

Services and tools for customer relationship management will become more robust, says Jacoboni. Already becoming a vital functionality, CRM technology can now monitor social networks. Twitter, Facebook, and other social media comments can destroy or enhance a company’s reputation.

Jacoboni predicts that most call centers will shift to cloud computing in the future instead of being on premise. This will not only eliminate a lot of capital investment but also give organizations greater capability for managing and storing their customer data and accessing it from anywhere in the world.

Most of all, the future for call centers holds the promise of eliminating a commodity mindset and focusing on solutions that bring customer loyalty and satisfaction back into the picture while still being cost-effective.

Lessons from the Outsourcing Journal:

Companies that base their labor-sourcing decisions on cost are looking more closely at the impact on margins and profit, and some are moving their offshored call centers back on shore to achieve a higher-quality service and increased customer satisfaction.

In the past, barriers to moving a call center back on shore included the high cost of staffing, training, technology, and the switching costs of terminating a contract early. Organizations can now handle their move back onshore cost effectively, thanks to hosted contact center technology and the distributed agent workforce model.

Among the questions organizations should ask when considering whether to move their offshore call center back on shore are:

Does the call center have the language skills and education levels that support the buyer’s service expectations in the future?

Will the offshore workforce be able to successfully meet the organization’s need for cross-selling and up-selling as the product or service matures?

What is the volume of word-of-mouth recommendations and the volume of customer churn that occurs because the offshore call center reps provide service that is not satisfactory to the callers?

i can understand all the frustration about overseas contact centers particularly the ones in india. i mean come on they just dont have the ability to speak english without the strong indian accent. so unlike centers in the philippines where english is the second language.